SEC To Announce BTC ETF Decisions by Jan. 10 Following Applicant Meetings: Report

BY Lorepunk •

December 22, 2023

Two signal developments in the months-long odyssey towards SEC approval of a spot BTC ETF may be pushing crypto prices higher — with Bitcoin at $43,642 and Ether trading at $2,333 at the time of writing.

The first was a series of meetings between several Bitcoin ETF proposers and representatives from the SEC and the NASDAQ stock exchange. Notices published on the SEC’s website listed meetings with proposers, including BlackRock, Valkyrie, Fidelity, and 21Shares (for a proposed listing on the Chicago Board Options Exchange).

The discussions were about how any successfully approved ETF listings would follow Nasdaq Rule 5711(d)—in layperson’s terms, how a proposed ETF would comply with the SEC’s stringent rules for compliance and oversight of any Bitcoin spot ETFs that might be approved.

One crucial change the SEC has asked for is the removal of “in-kind” redemptions for ETFs—meaning that you’ll need fiat currency to buy shares in these funds—but the funds themselves will hold lots of Bitcoin.

BlackRock, among others, had been deliberating with the SEC about this for weeks—and now that it has agreed to the stipulation, other proposals have likely followed suit. The SEC prefers cash-only because it avoids the risk that unregistered brokers and handlers could buy in using Bitcoin.

“The reason the SEC wants cash creates only is this means only the ETF issuer handles BTC and not the intermediaries (registered broker dealers can’t). They’re probably also not comfortable with having unregistered broker-dealer subsidiaries handle either (because they’re not registered),” Bloomberg ETF analyst Eric Balchunas explained in a Dec. 14 post on X.

Because cash must change hands to buy ETF shares, this removes one significant advantage of a bitcoin spot ETF—tax efficiency. Major bitcoin holders like Grayscale won’t be able to get spot ETF shares by directly using bitcoin bought cheaply years ago.

What’s the second development? According to reports by Fox Business, sources close to the firms indicate the date by which the SEC will deliver its decision on ETFs: Jan. 10, 2024.

SCOOP: @SECGov is having what's described as a rare joint conference call with prospective "spot" #BTC ETF filers, as its closely watched decision looms on whether to give these cos the green light to sell to small investors access to crypto. @FoxBusiness reported yesterday the…
— Charles Gasparino (@CGasparino) December 21, 2023

While the cash-only requirement is a setback for hopeful applicants, any approved ETF can attract new capital into the crypto space. Each proposal is structured to acquire Bitcoin at prevailing market rates, so when you buy $50 worth of an ETF, that fund will grab that same amount of Bitcoin via an exchange such as Coinbase.

Retail investors who have sat out crypto, worried about hacks, scams, bankrupt exchanges, and lack of federal protections, can take positions in Bitcoin without ever touching a wallet or exchange.

With some applications reaching the deadline to be approved or denied, Jan. 10 will be a pivotal day for the crypto industry. While investors can already purchase bitcoin futures ETFs, spot bitcoin ETFs will onboard investors joining crypto for the first time.

Some of the ETF proposers are already gearing up for approval, with Bitwise launching a new ad for its proposed offering on Dec. 20. “Satoshi sends his regards. Look for Bitwise, my friends,” says actor Jonathan Goldsmith, known as the “Most Interesting Man In The World,” in the ad.